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Unions could face a big obstacle in 2023 if the economy falls into a recession

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American businesses see push to unionize in light of recession fears

The union movement that kicked off across the country more than a year ago has continued its momentum in 2022, with workers in warehouses, coffee shops, grocery stores and airlines pushing for representation.

Working conditions during the pandemic pushed many of these frontline workers to organize, but fears about the economy and a potential recession could stand to curb the union boom if the job market shifts.

Unions can help workers secure better pay, schedules and job security through contract agreements, but some organizers claim their employers retaliate against them and endanger their livelihoods.

Workers like Robert “Rab” Bradlea, 32, are willing to take on this risk, despite recession talk. Bradlea scaled back his hours at Trader Joe’s Wine Store in New York City and picked up a second job as he and some of his coworkers sought to unionize.

Bradlea said the move to organize under the United Food and Commercial Workers International Union had the support of most of his coworkers. Some opposed joining a union, either because of previous experience or fear of losing their jobs. But Bradley thought only he and his fellow organizers were putting themselves at risk.

“I thought they would look for ‘bad apples’ and weed out organizers specifically, rather than torch an entire store,” Bradlea said.

Instead, before the beloved wine store could even file a petition for a union election, Trader Joe’s abruptly closed the location on Aug. 11, telling employees that same day. Trader Joe’s spokesperson Nakia Rohde said in a statement to CNBC that the grocer opted to close the “underperforming” store to support its Union Square grocery store using the wine shop’s space ahead of the holiday season.

2022’s union boom

So far, this year has proved to be a success for the labor movement. Union petitions from Oct. 1 through June 30 were up 58% over the prior year, to 1,892, according to the National Labor Relations Board.

By May of this year, petitions for the year had exceeded the total number of filings in all of last year. The NLRB has yet to release full year data, but a CNBC analysis of filings shows nearly 900 more petitions in fiscal year 2022 over last year’s numbers.

This comes at a time when public approval of labor unions continues to climb. Recent Gallup data show  71% of Americans now approve of labor unions, up from 68% last year and 64% pre-pandemic. The measure is at its highest level on record since 1965.

The job market, particularly for retail trade, accommodation, food services and transportation and warehousing workers, is still favoring employees, with a combined 1 million more job openings today in those three sectors compared with pre-pandemic levels.

“Right now in the retail space, we have so many more jobs than we do workers, and that puts disproportionate power in our hands right now because the company needs them almost as much as we need them,” said Hannah Smith, an employee at the recently unionized REI store in Berkeley, California.

REI did not respond to a request for comment from CNBC.

The shift in the balance of power has led some employers to hike pay and enhance other benefits. For example, Amazon said on Wednesday that it’s hiking average hourly pay from $18 to more than $19 for warehouse and delivery workers. The announcement comes ahead of its annual Prime Day promotion and a busy holiday season, as well as a union election in Albany next month.

As the Federal Reserve continues to aggressively raise interest rates to fight inflation and cool down the economy, market watchers, economists and executives are warning of a potential recession in 2023. If the economy cools off, the union movement may follow suit, according to Catherine Creighton, director of Cornell University’s Industrial and Labor Relations branch in Buffalo. But it seems unlikely in the short term.

“I think it will certainly make it more difficult if we do have a recession, where it’s harder for employees to find other employment, they [may] be less likely to take the risk of unionization,” Creighton said. “I don’t see that we are in that position at this point, because employers are still having a really hard time filling jobs, the baby boomers have retired and all evidence points to the fact that the labor market is going to be favorable to employees in the near future.”

For now, advocates believe the momentum will be hard to slow down. Whether it’s petitions or other wins, like a California law that creates a council to govern the fast-food industry labor conditions, 2022 has been a banner year for organizing.

“I think it’s the collective action that you’re seeing that isn’t going to get stopped by whatever the recessionary forces are, because working people have walked through fire during this pandemic, showed up every day to work, in many cases risk their lives,” said Mary Kay Henry, president of the Service Employees International Union. “And they’re ready to expect more in their work life and demand dignity and respect on the job.”

Starbucks petitions slow down

Some employees say interest in organizing has fallen somewhat as their employers appear to fight back, using tactics like shuttering stores, firing organizers and offering tantalizing benefits to non-union shops only.

At Starbucks, for example, the number of union petitions fell every month from March through August. There was a slight uptick in September with 10 petitions filed so far, according to the NLRB.

Since interim CEO Howard Schultz returned to the company in April, Starbucks has adopted a more aggressive strategy to oppose the union push and invest in its workers.

In May, the company announced enhanced pay hikes for non-unionized stores and extra training for baristas that went into effect in August after holding feedback sessions with its employees. The union has said the coffee giant is illegally withholding the benefits from cafes, but Starbucks maintains it cannot offer new benefits without negotiations for union shops. Legal experts predict the benefits battle will wind up before the NLRB.

“Our focus is on working directly with our partners to reimagine the future of Starbucks. We respect our partners rights to organize but believe that working directly together – without a 3rd party – is the best way to elevate the partner experience at Starbucks,” Starbucks spokesperson Reggie Borges told CNBC.

Tyler Keeling works as barista trainer at a Starbucks in Lakewood, California, which has voted to unionize, and also is organizing other stores with Starbucks Workers United. He said the additional benefits not being offered to unionized stores has both intimidated and motivated people, and that better pay is important in this economic climate.

“People are seeing that Starbucks is willing to kind of mess with their livelihood to prevent this union, and that scares people. But at the end of the day, as far as it is driving people to not organize, it’s also driving people to organize,” Keeling said.

He added that he believes once the union makes continued progress on having fired workers reinstated and is successful in having benefits extended to union stores, there will be more headway made on petitions.

And stores are still pushing for more despite the threat of a looming recession. Billie Adeosun, Starbucks barista and organizer in Olympia, Washington, said unionizing is a “big risk,” claiming losing your job is a “real possibility,” but the prospect of successful contract negotiations with better pay and benefits is a motivator.

“Most of us make $15 to $18 an hour and none of us are working 40 hours a week, and that’s just not a living wage,” Adeosun said. “A lot of us have to get a second job or rely on government assistance to pay our bills, so yeah, we are terrified to be doing this work in spite of the economy and the fact that it is just falling apart right in front of us.”

About 240 locations out of its 9,000 company-owned cafes have voted to unionize as of Sept. 22, according to the National Labor Relations Board. But contract negotiations could help or hinder the push to unionize the nation’s largest coffee chain.

Hannah Whitbeck (C) of Ann Arbor, Michigan, speaks as Alydia Claypool (L) of Overland Park, Kansas, and Michael Vestigo (R) of Kansas City, Kansas, all of whom say they were fired by Starbucks, listen during the “Fight Starbucks’ Union Busting” rally and march in Seattle, Washington, on April 23, 2022.

Jason Redmond | AFP | Getty Images

BTIG analyst Peter Saleh said signs of progress on a contract between the union and Starbucks could be one catalyst to reaccelerate organizing. On the other hand, if they don’t reach an agreement, workers can vote to decertify the union after a year.

So far, Starbucks has only begun negotiating with three stores, two in New York and one in Arizona. But the company said Monday that it sent letters to 238 cafes offering a three-week window in October to start negotiations.

And despite the petition slowdown at Starbucks, organizers’ success has inspired workers elsewhere, like Bradlea, the Trader Joe’s employee.

“Their stores are about the same number people as the Trader Joe’s wine store. This is doable, and they’re succeeding at it,” he said.

Power in the balance

Even with talk of a potential recession, some workers say they’re undeterred, given the competitive job market. Brandi McNease, organizer at a now-closed location of Chipotle Mexican Grill in Augusta, Maine, said the decision to petition was driven by the power workers have and the current economic climate.

“We looked around at the endless now-hiring signs plastered on every fast food drive-through menu and decided that we could just quit and take another job or we could fight, and if we lost, still take another job,” McNease told CNBC in an email.

The store was the first to file for a union election at the burrito chain, and the company said the location was permanently closed due to staffing challenges, not the union petition.  Workers called the move retaliatory and have filed multiple unfair labor practice charges against the company with the NLRB, McNease said.

Chipotle declined to comment.

Some workers say the last recession has informed the need for better worker protections today, and now is the time to push.

“I had coworkers who lived through the 2008 recession and had a really tough time finding jobs then,” said Smith, the REI employee in California. “Creating a union now, it felt like a way to protect for that in the future.”

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House approves tentative labor deal to avoid rail strike, sends to Senate

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A rail employee works a Union Pacific Intermodal Terminal rail yard on November 21, 2022 in Los Angeles, California.

Mario Tama | Getty Images

The House passed legislation Wednesday that would force a tentative rail labor agreement and thwart a national strike. The bill now goes to the Senate, where Majority Leader Chuck Schumer, D-N.Y., has promised swift passage.

The House voted 290 to 137 — with 79 Republicans joining 211 Democrats — to pass the legislation, which approves new contracts providing railroad workers with 24% pay increases over five years from 2020 through 2024, immediate payouts averaging $11,000 upon ratification, and an extra paid day off.

Eight Democrats and 129 Republicans voted against the legislation. 

In a separate 221 to 207 vote, the House also approved a resolution to provide seven days of paid sick leave in the contract instead of one, which is rail workers’ main disagreement with the current deal. As it stands rail workers don’t have guaranteed paid sick leave.

The vote comes after President Joe Biden called on Congress to intervene in the stalled talks between railroads and some of the industry’s major unions. He met with the four House and Senate leaders Tuesday in an effort to avoid the economic impacts of a rail strike, which the industry forecasts could cost the U.S. economy $2 billion per day.

How a rail strike could interrupt parcel delivery services

Biden has said he’s reluctant to override the vote against the contract by some unions but that a rail shutdown would “devastate” the economy.

“This overwhelming bipartisan vote in the House of Representatives makes clear that Democrats and Republicans agree that a rail shutdown would be devastating to our economy and families across the country. The Senate must now act urgently,” Biden said in a statement.

Railways and their labor unions had until Dec. 9 to reach an agreement before workers promised to strike.

In a statement Tuesday, the Brotherhood of Maintenance of Way Employees Division of the International Brotherhood of Teamsters said passing legislation to enforce an agreement denies them the right to strike and will not fix the problems or concerns of railroad workers.

The union said it was calling on Biden and any member of Congress who “truly supports the working class to act swiftly by passing any sort of reforms and regulations that will provide paid sick leave for all Railroad Workers.”

According to the Association of American Railroads, an industry group, a presidential board created to help resolve contract talks reviewed the union’s request for additional paid sick days and instead offered additional salary.

“If the unions are interested in a holistic discussion for structural changes as it relates to their sick time, I think absolutely the railroad carriers would be up for a holistic discussion, but [they] have not done it in the zero hour,” AAR President and CEO Ian Jefferies said at a press conference on rail preparations.

Each union has its own sick day policy, according to National Railway Labor Conference, or NRLC. If an employee is sick, they need to be out of work between four and seven days before they collect their version of sick pay.

The tentative labor deal grants workers one additional personal day, for a total of three personal days for railroad workers. A worker must provide 48 hours notice to request a personal day. The measure approved by the House Wednesday would add paid sick leave to the agreement.

Sen. Bernie Sanders, I-Vt., said on social media before the vote that the tentative agreement did not go far enough.

Strike prep curtails trade

Even the threat of a strike can have impacts on rail movement.

According to federal safety measures, railroad carriers begin prepping for a strike seven days before the strike date. The carriers start to prioritize the securing and movement of sensitive materials such as chlorine for drinking water and hazardous materials.

Ninety-six hours before a strike date, chemicals are no longer transported. According to the American Chemistry Council, railroad industry data shows a drop of 1,975 carloads of chemical shipments during the week of Sept. 10 when the railroads stopped accepting shipments due to the previous threat of a rail strike.

Corey Rosenbusch, president and CEO of The Fertilizer Institute, said railroad carriers have told their members that ammonia shipments, a critical component for fertilizer companies, would not be allowed on the rail starting Dec. 4 if a labor agreement isn’t reached.

“It traditionally takes five to seven days for the supply chain to catch up when you have a shutdown,” said Rosenbusch. “Fertilizer manufacturing would have to be curtailed.”

The four major railroads typically move more than 80% of the agricultural freight traffic, according to the National Grain and Feed Association.

“We are looking for alternatives now to position our product,” said Mike Seyfert, the association’s president and CEO. “We have zero elasticity right now. There are zero drivers, and the barge situation with the low water levels has only added to this challenge.”

Collective bargaining’s future

Brendan Branon, NRLC chair, told CNBC that Congress, in voting on the labor deal, is also weighing in on the future of collective bargaining. He urged Congress to follow the recommendations of the Presidential Emergency Board, which Biden created in July to resolve the ongoing dispute between major freight rail carriers and unions.

The board crafts its recommendations under a principle known as pattern bargaining, which is the process used by trade unions and employers where demands and entitlements are made.

“Pattern bargaining promotes stability in collective bargaining, and it encourages settlement,” Branon said. “There’s any number of arbitrators and PEBs who have recognized that this is not only acceptable, this is the most appropriate form to settle complex negotiations, especially multi-employer, multi-craft agreements.”

Branon said a number of industries including the railroads have developed a set of clear practices in bargaining, and the additional negotiating by the unions after the tentative agreement departs from the framework recommended by the PEB.

“Departing from a pattern would establish a precedent that there’s still a better outcome achievable, and I think it would pose significant stress and risk for collective bargaining in the future for the railroad industry,” he said.

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Airbnb launches platform allowing renters to host apartments, partnering with major landlords

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Airbnb introduces Airbnb-friendly apartments

Airbnb is partnering with several major landlords and management companies to list designated apartment buildings where renters are allowed to offer short-term sublets on the site.

The company said Wednesday that a new page on its website will list so-called Airbnb-friendly buildings, which will give tenants the option to host their apartments just as homeowners can.

Typically, rental buildings prohibit tenants from subletting for short stays.

To start, Airbnb is showcasing 175 apartment buildings in more than 25 major markets, including Los Angeles, San Francisco, Atlanta, Dallas, Houston, Denver, Seattle and Phoenix. Some cities, such as New York City and Washington, D.C., are not available due to local restrictions on short-term rentals.

The platform will help tenants host their rentals, and help the buildings attract tenants who may want to host. How much tenants could earn will vary.

“It depends on the building, depends on the location, there are a lot of different assumptions,” Nathan Blecharczyk, co-founder of Airbnb.

Given how much apartment rents have climbed over the past few years, along with home prices and other rising prices, tenants are increasingly looking for ways to supplement their incomes to make their monthly payments. Rents are starting to ease, but are still up 10% from a year ago, according to Apartment List.

Last year, rents rose more than 15% from the year before.

The new page on Airbnb’s website will also offer a calculator to show how much money the tenant can potentially make per month. The calculation changes depending on the number of bedrooms and the number of nights each building allows, as well as the potential asking rents, given the building’s amenities.

Apartment buildings can also charge the primary tenant a fee of up to 20% of the price of each Airbnb use. For those buildings that have been in test mode so far, Airbnb said tenants have hosted an average of nine nights per month with an average income of $900 per month.

All hosts in the participating buildings must be the primary resident, and the buildings can restrict how many nights per month the apartment can be sublet. That’s generally between 80 and 120 nights per year. The restrictions, which can be enforced since the transactions all take place on the portal, are intended to prevent investors from taking part and subletting the apartments full-time.

The apartment building owner or management company also have the right to review the listings before they go live and deactivate a listing if it does not comply with the building’s standards. They can also mandate a government ID from all potential subletters.

Equity Residential and UDR, which are apartment real estate investment trusts, or REITs, and Greystar, the largest apartment management company in the U.S.,  are among the major names offering apartments with hosting privileges on the new Airbnb platform.

“We believe this platform will provide the right tools for both owners and residents to effectively manage short-term rental activity without impacting overall housing supply,” a Greystar representative said.  “We are collaborating with Airbnb on this innovative approach to participate in the 21st century sharing economy in a thoughtful way.”  

CNBC producer Lisa Rizzolo contributed to this story.

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Disney is the biggest winner — and loser — at the Thanksgiving box office

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Geber86 | Getty Images

This year’s Thanksgiving box office was both feast and famine for Walt Disney.

While “Black Panther: Wakanda Forever” added $64 million to its domestic tally during the five-day time frame, Disney’s latest animated feature “Strange World” failed to lure in moviegoers, generating just $18.6 million between Wednesday and Sunday and a dismal $11.9 million for the traditional three-day opening.

That is the worst three-day opening for a Disney animated feature since 2000’s “The Emperor’s New Groove,” which brought in just under $10 million during its debut, according to data from Comscore.

The dichotomous weekend comes as CEO Bob Iger returns to the helm of the company, promising to restructure Disney in a way that puts creativity at the forefront. Iger is expected to expand on these plans during a company town hall on Monday.

The week of Thanksgiving is typically a robust time at the box office. In the last decade, not counting 2020 and 2021, the five-day Thanksgiving spread — consisting of the Wednesday before Thanksgiving through Sunday — has resulted in more than $250 million in ticket sales each year. 

This year, the domestic Thanksgiving box office tallied around $121 million. “Black Panther: Wakanda Forever” led the pack, with “Strange World” taking second place. All other films, including Sony’s “Devotion,” Disney and Searchlight’s “The Menu,” Warner Bros.‘ “Black Adam” and Universal’s “The Fabelmans” tallied less than $10 million each.

Not in the mix is Netflix’s “Glass Onion.” The streamer declined to share box office receipts for the latest Rian Johnson film, although it is believed to have tallied between $13 million and $15 million during the five-day stretch.

While “Strange World” outperformed a number of other films this weekend, its muted opening raises concerns about Disney’s animation strategy and if Iger can right the ship.

Disney’s previous CEO Bob Chapek, who took over for Iger just as the pandemic was starting in early 2020, made a series of decisions that alienated the company’s creative leaders in the wake of movie theater closures.

To start, he reorganized the company to funnel creative decisions through a single executive, rather than with each studio, taking power away from the people who were responsible for Disney’s biggest blockbusters.

Chapek then opted to have a number of Pixar and Disney Animation films released directly on the company’s streaming service instead of in theaters. This was in part because, at the time, children weren’t vaccinated and families were avoiding theaters, but also to try and bolster Disney+’s library with new content.

These decisions have led to a lot of confusion for audiences when animated Disney films have been released theatrically. Either these moviegoers are unaware the film is being put into the market or they think it is coming to Disney’s streaming platform.

This happened when Disney released “Lightyear” in cinemas in June. While the two previous Toy Story franchise films each opened to more than $100 million domestically, “Lightyear” snared just $50 million in ticket sales during its debut.

Disney Animation’s “Strange World” follows the Clades, a family of explorers whose differences threaten to topple their latest — and by far — most crucial mission.
Disney

Compounding this strategic decision is the fact that family films have been sparse at the box office in the wake of the pandemic. This means there are fewer opportunities for studios to market film trailers to their designated audience in cinemas and must rely more heavily on television and digital ads.

“No question a slow overall marketplace and a lack of awareness building horsepower for ‘Strange World’ hurt its potential to follow in the tradition of the long line of Disney animated hits over this very important holiday weekend in theaters,” said Paul Dergarabedian, senior media analyst at Comscore.

The Thanksgiving box office crown has long been held by Disney and its animated features, with films like “Frozen II,” “Coco,” “Moana,” and “Ralph Breaks the Internet” leading the pack in the last decade.

Even “Encanto,” which was released during the Thanksgiving frame last year, managed to generate more than $27 million during its three-day opening and more than $40 million across the full five-day holiday weekend.

Perhaps, “Strange World” will follow a similar path as “Encanto” and gain more attention from families once it is added to Disney+.

Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal distributed “The Fabelmans.”

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